Microsoft Will Take Steps To Block The Google-Yahoo Japan Partnership

"We plan to present evidence to the Japanese FTC explaining why we believe that this deal is substantially more harmful to competition than Google’s deal with Yahoo in 2008 that the DOJ found to be illegal," says a Microsoft rep.

When Yahoo Japan, which operates mostly independent of Yahoo U.S., decided to partner with Google it blindsided Microsoft. After all, Yahoo and Microsoft are in the middle of a big partnership in U.S. It's safe to assume Microsoft thought it would work with Yahoo in Japan, too.

That didn't happen. Now, Google and Yahoo are joining forces to own 98% of the search market in Japan, according to Microsoft's estimates. That's more than Yahoo and Google would have owned in the U.S. when the companies were going to join forces to parry Microsoft's Yahoo takeover plans. The Department of Justice told Yahoo and Google they couldn't team up because they would own too much of the search market.

In Japan, regulators appear to be okay with Google owning the search market. Earlier this week, Takahide Matsuyama executive secretary of Japan's FTC said, "In the U.S., the concern was that the companies would go from advertising competitors to collaborators. If they continue to compete for advertisers, the issue of changing your search engine is not an anti-trust problem."

Well, now Matsuyama is going to have Microsoft in his ear trying to convince him why he's wrong.

Microsoft has a good argument to make, according to Ted Henneberry, and antitrust expert and senior partner at law firm Orrick, Herrington & Sutcliffe. He told us, "In most jurisdictions, this deal would raise very serious and substantial competition concerns." He also says he's "surprised and puzzled" Japan would approve the deal.